With the recent Federal Court decision, trademark owners can no longer use copyright in a mark or label to prevent parallel importation.

Suppose you traveled overseas and bought that Dior belt you've always wanted. No big deal, right? Now, suppose you went and bought three suitcases full of the same thing, intending to sell them to friends and neighbors back home. Do you think the fashion brand will run after you for copyright infringement? Even if they did, you'll probably win, thanks to the recent decision in the Polo/Lauren Company L.P. v Ziliani Holdings Pty Ltd.

Here's what happened: Mr. Ziliani traveled to the US and bought genuine Polo/Ralph Lauren clothing with the intention of reselling it in Australia. Polo/Lauren, copyright assignee of the famous polo player logo in Australia, then alleged that Ziliani had infringed copyright by importing, without permission, articles of clothing into Australia which bore the said logo. This argument has long been used to prevent parallel importation into the country. The proceedings were dismissed with costs.

According to a cogent analysis of the case by David Longmuir, the main issue was whether a symbol or trademark, comprised of an artistic work when lawfully applied or embroidered overseas to the external surface of an article of clothing, was protected by copyright under the Copyright Act 1968 so that the copyright owner in Australia could prevent importation into, or sale in, Australia.

The Court ruled in favor of Ziliani based on three rather complex defenses to copyright infringement under the Copyright Act:

·         One, the Court ruled that the polo player logo was a "non-infringing accessory" within the meaning of section 44C of the Copyright Act because it was a label embroidered (with the US copyright owner's consent) onto the imported garments. Ergo, the importation of said garments did not infringe copyright.

·         Two, the Court found that section 77(2) provided a defense to claims for infringements based on sections 37(1) and 38(1). Copyright infringement created by the latter means not just the act of importation, sale or display for sale without the granting of a license by the copyright owner in Australia. It is also necessary for the importer to have requisite knowledge that the article with embroidered logo would infringe copyright if made in Australia

·         And three, the Court also held that the polo player logo was a "corresponding design" within the meaning of section 77 of the Copyright Act. This means it can be imported without infringing copyright because it was a shape or configuration – rather than a feature of pattern or ornamentation – embroidered in the garments.

The underlying principle behind the Court's decision seems to be that companies should not be entitled to control the market for their products by simply creating a label or a package in which copyright will subsist. Many believe that the Court wanted to limit the scope of copyright law so that distributors do not gain "exclusive market access" through the "inappropriate use of copyright."

From the consumer's point of view, this means the end of local monopolies by owners of designer labels who now cannot use their copyright ownership of their distinctive logos as a way to bar others from importing genuine articles. But brand owners might see the case differently - as the start of a slow process of losing control of their copyright.